Oil prices rose more than 2 per cent on Wednesday, climbing to near 3-1/2 year highs, after U.S. President Trump abandoned a nuclear deal with Iran and announced the “highest level” of sanctions against the OPEC member.

Ignoring pleas by allies, Trump on Tuesday pulled out of a 2015 international deal with Iran, making investors nervous about rising risks of conflict in the Middle East and about oil supplies in a tight market.

The United States will likely re-impose sanctions against Iran after 180 days, unless some other agreement is reached.

Brent crude futures gained Wednesday morning; the session high of $77.43 a barrel was the highest since November 2014.

U.S. West Texas Intermediate (WTI) crude futures rose 2.6 per cent, or $1.79 to $70.85 a barrel.

The EIA report helped lift U.S. gasoline futures to $2.1674 a gallon, the highest since Hurricane Harvey sent prices surging in August. U.S. heating oil futures surged to $2.2258 a gallon, the highest since Feb. 2015.

Iran re-emerged as a major oil exporter in 2016 after international sanctions against it were lifted in return for curbs on its nuclear program. The country, the third-biggest producer of crude within the Organization of the Petroleum Exporting Countries, exported about 2.6 million barrels per day (bpd) in April.

Analysts’ estimates of the possible reduction in Iranian crude supplies as a result of any new U.S. sanctions range from 200,000 bpd to 1 million bpd.

WATCH: President Trump announces the U.S. withdrawal from the Iran nuclear deal

Investment bank Goldman Sachs said in a note that Trump’s announcement brought upside risks to its forecast that Brent crude will hit $82.50 a barrel by the summer.

Several refiners in Asia said they were seeking alternatives to Iranian supplies.

A number of countries have already cut reliance on Iranian oil, as well as other “traditional” sources of supply, due to a surge in cheaper U.S. crude exports.